Welcome to Trump-Land
As I awoke just following a joyful and quiet Thanksgiving holiday, I quickly realized that we are still under the effect of our presidential election which occurred roughly 3 weeks ago, and that key reversals and trends that developed immediately following the presidential election on November 8 continue to guide and influence market direction.
First and foremost it is US equities which continue to dominate financial news. Now for a third week in a row we have seen all four major indexes trade to new highs, with the Dow Jones industrial average and the Standard & Poor’s 500 moving to all-time record highs. The Russell 2000 for example is up over 16% in the last 15 days just following the presidential election.
In minutes released earlier this week by the FOMC which detailed Novembers meeting clearly state the high likelihood of an interest rate hike in December. Additionally, we are certainly in a risk on environment with equities moving to new all-time highs and investment capital moving from alternative investments such as safe haven plays into the equities markets
The precious metals complex closed with mixed messages. While both gold and platinum remains under pressure, silver and palladium were able to trade higher on the day. The overall pressure that we have seen in the precious metals markets is based upon our current risk on environment and a very strong US dollar.
Gold futures continue to trade under pressure today off about a half of percent closing at $1183 40, a $5.90 sent decline. At the same time spot gold closed fractionally lower (down 30 cents) at 1183.60. We now see an equilibrium between gold spot and futures prices.
Silver on the other hand was able to add to a weakening US dollar with about a $.15 gain to close up $.20 at 1651.
How long these current trends will last is anybody’s guess. However, until Pres. elect Trump becomes the 45th president of the United States on January 20 of next year, we could see the trends which began one day following our presidential election continue. Currently the American public as well as global citizens are in a wait and see pattern as to how this new president elect will actually govern.
Key questions as to what campaign rhetoric will morph into presidential policies remains to be seen. Until that point we are still under the dome of short-term optimism based upon potential of a new fresh start, and the dismantling of special interest politics which dominated the political climate for quite some time.
The key is whomever you cast your vote for in the last presidential election, or if you simply watch from the sidelines from another country, it is in the interest of all of us that Pres. elect Donald Trump is able to govern effectively and grow into his position as the president of the United States. To that end we all want to see him succeed, because his success is part and parcel of our success.
Wishing you as always, good trading,